EP Financial's borrowed down-payment program empowers first-time homebuyers
How the program works:
Clients that apply to EP are prequalified for a mortgage according to industry standard underwriting criteria and are then underwritten for a down-payment loan
Clients prequalified by EP Financial are introduced to a mortgage broker who accounts for the borrowed down-payment loan and works to ensure that the client’s debt ratios are in line to satisfy lenders and insurers The mortgage broker then provides a preapproval and submits the application to a lender
EP Financial introduces approved clients to homebuilders in the EP Financial preferred builder network where they can search for and purchase a home The new-home purchaser must qualify for a mortgage with the 5% loan payments accounted for in the total debt servicing ratios, to ensure that the home purchaser can service both the mortgage and the loan
Cost to the homebuyer
5% per annum interest rate with monthly or a fiveyear balloon payment based on affordability.
The homebuyer must be able to afford the purchase closing costs.
EP Financial’s role
EP Financial provides the client with a personalized home-buying experience from start to finish, including sourcing a desired home and answering all home buying questions.
Credit monitoring, financial coaching, and homeownership education is offered to the client during the duration of the loan period. EP either directly lends the 5% down payment or assists in facilitating through other lenders
The Everyday People Financial (“EP Financial”) borrowed down-payment program (BDPP) offers a flexible downpayment option for borrowers who qualify for a mortgage and are purchasing a newly constructed home
Through EP Financial, the qualified borrower may access 5% equity of their new home purchase as a loan, which will be applied as a down payment on their purchase This allows the buyer to become a homeowner with an insured mortgage that would be offered at a lower interest rate than current flex-down options in the market with flexible repayment terms
EP Financial lends or arranges the approved client’s required down payment, which allows for a mortgage-insured loan with any lender qualified to offer insured mortgages
The down payment loan could either be amortized and repaid over a flexible repayment period or can be repaid as a balloon payment at the end of the term
In both cases, additional payments made to the loan, or an early payout would not be penalized The downpayment loan would be required to be paid out upon a sale or refinancing of the home.
Parents for their children, and other non-residing immediate family members could co-sign for the homebuyer to quality, if needed
Can technology provide enough affordable homes? Absolutely, say these advocates.
One of the most critical global issues, felt intensely in Canada, is the housing shortage.
In 2022, Canada Mortgage and Housing Corporation (CMHC) projected that 3 5 million additional housing units must be built this decade, over and above what is normally built, to bring house prices to an affordable level (Estimating how much housing we’ll need by 2030) It’s a complex, polarizing and, above all, urgent problem. Is there any chance there might a solution somewhere out there? In a Globe & Mail editorial from December of 2023 (There are no solutions to Canada’s housing crisis only trade-offs), Josef Filipowicz, Senior Fellow of the Fraser Institute, suggested there are no real solutions as he quoted American economist Thomas Sowell who said, “There are no solutions, only trade-offs.”
Filipowicz, who is an independent urban and regional policy specialist, and former analyst at the Canada Mortgage and Housing Corporation and the Fraser Institute’s Centre for Municipal Studies, goes on to list his argument that there are three primary alternative solutions: build our cities outward, with the trade off that more land for homes means less land for everything else; grow upward resulting in more density, with the trade off being that many neighbourhoods would have to significantly change; or slow down the rate of population growth, with the trade off being a slower-growing or even shrinking workforce
3
Filipowicz hasn’t really touched upon the very pragmatic obstacle of actually building enough homes, whether it’s at the far edges of the city or in the developed areas of the city Regardless of where the homes will be built, they still have to be built and it’s the construction industry that is at the forefront of that solution.
No doubt, the worker shortage is a major stumbling block. Various sources report various scenarios, but let’s use the CIBC Economics in Focus June 2023 newsletter (If they come you will build it Canada’s construction labour shortage) which states that the average number of workers per unit under construction has fallen from 6 to 4 over the past decade Not surprisingly, this means it takes a lot longer to build a unit and the units become more expensive. Perhaps, just as concerning is that the number of construction workers over the age of 55 is at a record high The newsletter goes on to predict that no fewer than 300,000 construction workers will retire in the next ten years
The question then is: how can more homes be built faster? Housing, Infrastructure and Communities Canada says it has a plan (Solving the Housing Crisis: Canada's Housing Plan) Under the plan’s heading of Changing the Way Industry Builds Homes, there are several interesting actionable items including: Introducing a Standardized Housing Design Catalogue, Scaling up New Tech to Build New Homes, Investing in New Approaches to Homebuilding, Providing Low-Cost Loans to Prefabricated Housing Projects, Simplifying the Way That Canada Builds Homes, and Making Building Codes Digital.
Continued on page 5
this issue
What does the U.S. election outcome mean for your investment portfolio?
p.16
New solutions to the housing crisis? Read key insights from industry experts Want to
Publisher
Energy market strategy expert Karleen Batty offers commentary on ESG's impact on the energy industry.
Business Edge’s Ernest Granson talks drones, GPS, and AI with Digital Construction experts.
p.18
Rob Driscoll sits down with Gold Terra CEO Gerald Panneton to discuss his latest foray in the Canadian mining industry.
p.10
Could AI be the solution to power the future of the energy industry? Don’t get left behind.
p.26
New construction techniques and technologies are already being advocated by numerous groups in the construction sector, and importantly, by those who are training today’s and tomorrow’s construction workforce. For Rick Duchscher, Lead at SAIT’s School of Construction Connector Lab, the emerging digital environment in the construction industry will have a major impact on productivity
“Collecting information and making that information accessible are crucial for efficiency and cost effectiveness in any building project,” Duchscher says. “Regardless of what capacity you’re working as at a construction site, whether it’s general contractor or project manager, information is essential to avoid waste and inefficient workloads. Using the digital management tools to provide the same information to everyone involved in the project in real time is far more effective than working with a siloed group, whether it’s the engineering consultants working with the architects and the civil engineers and the geomatics surveyors, and all the other different moving parts on a construction project. When you have all of the project participants working together, being privy to the same information in real time, it will be a huge game changer for productivity in the construction industry, particularly home building “
Duchscher’s colleague, Dylan Kunz, Academic Chair- Civil Engineering Technology at the School of Construction, also points out that researching and actually implementing alternative methods of construction are vital to improve building production rates.
Dylan Kunz, Academic Chair- Civil Engineering Technology at the School of Construction & Rick Duchscher, Lead at SAIT’s School of Construction Connector Lab
“I truly believe that one of the most viable solutions is to incorporate pre-fabricated housing,” says Kunz “They’re more affordable, they’re more efficient to construct and it’s also a safer construction process. That technique is being used for some high-rise construction applications already. I believe there is a huge opportunity for this method of construction to help in solving the shortage problem.”
It's true that there are issues to be ironed out in order for pre-fabrication to be an acceptable business model, scaling up being one of those issues for builders that have entered or are planning to enter that sector. To accommodate that, Housing, Infrastructure and Communities Canada says its housing shortage strategy includes the launch of a new Homebuilding Technology and Innovation Fund to help scale up, commercialize, and promote adoption of innovative housing technologies and materials including for modular and prefabricated homes.
Shawn Gray, founder and CEO of ConstructionIQ Advisory, feels there are other aspects, as well, in the construction process that could be holding back the number of units being built, as well as contributing to higher costs. Along with the workforce shortage, those adverse aspects, he says, include challenges in cashflow, planning, rework and administration “While there are policy and permitting issues and even supply issues,” he says, “once the shovels hit the ground, that is where the bottlenecks are going to occur When over half of builders are experiencing cash flow restraints, preventing them from bidding on work, procuring workers or equipment and material, this is low hanging fruit which can reasonably be addressed It could be as simple as using software that enables early payment That type of technology was not available 10 years ago but is now making its way into the residential building sector ”
The type of software to which Gray is referring acts as a middleman to facilitate early payment of invoices to suppliers and/or subcontractors, relieving the standard 30/60/90-day payment terms Gray feels bringing in digitalization creates more of a partnership between the general contractor/subtrade/supplier relationship. “If you understand the core constraints preventing a productive and profitable build and address them,” Gray says, “then the cost should eventually come down If it costs a business 20% more to build a house, you have to identify those costs and eliminate them. This enables the builder to price the house more affordably and still make profits The opportunity is completely there.”
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ESG and Bill C-59: threats to the legacy energy industry or the great environmental hope?
ESG (environmental social and governance) edicts seemed to arrive into the business world several years ago swinging a big ax. Fossil fuel
BE: Karleen, ESG principles encompass some pretty complex concepts For the purposes of today's interview, I'd like to focus on the environmental aspect, which, of course, has a special significance for the fossil fuel sector In your role at EY, how do you approach the different levels of legacy companies, whether it's the C suite or the field office, when it comes to incorporating the E in ESG principles?
KB: I think this is a good question, for sure What we're finding is that companies are needing to think of environmental governance throughout the whole organization. So, whether it is field staff or in the C suite at head office, to truly make change, it has to be embedded into the ethos of the company It has to be one of their top priorities. What each of them are focused on as individuals might be slightly different, but it does have to be broad and sweeping for the entire organization
story Continued on next page corporations, especially publicly listed companies, were forced to quickly deal with demands from not only environmental activists but inspired investors as well The passing of provisions to Bill C-59 that severely penalize companies accused of greenwashing added another layer of pressure Karleen Batty, Partner and Industrials & Energy Market Strategy Leader with EY specializes in guiding energy companies through the ESG maze. Recently, Karleen served as panel moderator for an Energy Disrupters conference panel held in Calgary She and other panel members discussed how companies can successfully operate their businesses under the scrutiny of ESG Karleen spoke with Business Edge journalist Ernest Granson during a quiet moment at the conference
BE: What would you say to those in the C suite that may be proving to have some resistance against incorporating some of those principles?
KB: I'm not sure that we're seeing a lot of resistance at the C suite anymore in the energy sector, to be honest I think it's alive and well, but perhaps people aren’t being as vocal about it as much given that Bill C-59 was just passed in June But, I do think most are accepting at some level. It's maybe how much capital they're willing to invest into the principle and how much risk they're willing to take on around their disclosure. But most companies are thinking about it, especially at the C suite level
BE: We know that the petroleum sector has had its challenges meeting with society's current environmental demands, but as you just mentioned, with Bill C-59, the sector has been handed a new and formidable legal requirement with the anti greenwashing provision, and that requires any company “to show adequate and proper substantiation in accordance with internationally recognized methodology when distributing that information about environmental benefit claims ”
Karleen Batty, Partner and Industrials & Energy Market Strategy Leader, EY discusses ESG issues with Business Edge’s Ernest Granson
We've seen this change has had significant effect on many energy companies Most of them have removed any information related to the environment from their websites and social media In your role, what's your advice to these companies in regards to this provision?
KB: Again, it's a broad question What we're finding, is most companies are continuing with their efforts, although they have swung somewhat from trying to mitigate accusations that they are greenwashing their environmental claims to greenhushing, where the companies continue on the same trajectory that they were doing before but they're just not talking about it. That’s a bit dangerous as well, right? We believe that not only is collaboration and discussion needed, but also the flexibility to fail. We need those companies to continue on the path to shoot for big changes If they’re not allowed the freedom to fail because they're worried about putting statements out there, then they stop talking about it, as has happened
When you stop talking about it, you stop doing it Part of our advice would be to not let that happen. Do what you can internally; review your policies and how you're tracking them, so that you can release statements that include numbers and have some substance to them. This helps your stakeholders to understand what you are doing. Most of all, be able to back it up.
BE: In the beginning of the summer of 2025, private citizens will be allowed to file complaints with the Competition Bureau to force these companies to prove their environmental declarations. The term “private citizens” could also include environmental activists and climate advocacy groups Would you say that these antigreenwashing amendments essentially designate a corporation as a guilty party, putting the onus on the company to prove that it's not guilty.
KB: I would agree there's a reverse onus because the onus now isn't on the complainant, right? The onus is on the company that has issued the statement to prove its validity but the standard to which they must prove it is uncertain There's much uncertainty around what the Act actually means Hopefully, there will be clarity because the penalty for not meeting it is quite onerous. Issuing an environmental statement is now a risk-based decision. Companies are asking, ‘Do we talk about what we're doing and put it out there with the risk of that penalty still looming?’ Each company will look at this differently, but what we are experiencing is that there are already fewer conversations around the issue
BE: Do you feel that these companies are finding their environmental efforts are now fading from the view of the public, that maybe the public isn't realizing the considerable effort and expense that has been exerted? In your experience, are they worried about this?
KB: I think part of the reason for why the law was enacted in the first place was to regain some trust around statements that were being released But I wouldn’t say a lot of our clients are worried about it because they are doing the right things, and are trying to make a difference. The energy sector is a brilliant ecosystem of people who have pivoted and changed. We have great engineers and great people who do make changes and the sector has been tackling these issues for a long time Whether it has been making changes quickly enough and with enough transparency is a different question We could debate that, for sure Unfortunately, the way that this law is written, it has resulted in greenhushing which is quite upsetting
We believe that not only is collaboration and discussion needed, but also the flexibility to fail.
BE: Let's talk about some of the methods that you may discuss with your client companies, for instance, using data to achieve measurable outcomes in sustainability efforts. Tell us about those tools and maybe some successful examples
KB: There are so many tools out there it's almost overwhelming. The amount of data that companies collect is massive, so part of the issue is getting access to that and making sure it's accurate and reported accurately We definitely have, at our fingertips, any number of important tools But I would suggest that the tool isn't as important as the governance around it. What’s crucial is the process you’re using to measure and report the data and the governance around that What is also extremely useful is to have third parties come in to validate that the numbers are accurate and the company is abiding by them
BE: Can you use that kind of data for the other two components of ESG, for social and for governance Are you able to use data for something that could be nebulous such as governance?
KB: You're touching on a very important part of this area and that is to say, not everything can be measured with a number. However, you can have different data points. For instance, how are you engaging with communities, how many different partnerships or strategic stakeholders are you engaging with? It might be hard to measure the strength of that relationship, but there are indications or qualitative factors that you can consider which can form part of the data you're gathering Tracking of that data is essential to make sure the company is on the right track, to make sure it is progressing towards its goal It’s important to point out that many of those factors can be outside of the company's control too. They're working in an ecosystem that includes suppliers, customers, governments and members of society that is outside of their control
BE: Can success incorporating ESG be measured in, let's say, the financial success of a company? We can see that ESG, of course, contributes to the good of society, but in the past, any business model had to adhere to the concept of being successfully financial for itself and also for its investors. Have you seen success in employing the ESG components in this business sense?
KB: The crux of your question is that, capital markets, by their very nature, are short term and looking for quick returns. So, are they valuing the right behaviors or the right actions that companies are taking? If Bill C-59 is a concern for businesses because of the greenwashing provisions, it's important to point out that the federal government has also included within Bill C-59 the introduction of some ITCs ( Clean Technology Investment Tax Credit) The intention is to put in place incentives to help with improving the economics of complying with ESG objectives.
Developing new technologies is very capital intensive and we don’t have a lot of certainty 20 to 30 years down the road, so companies are being asked to take large capital risk without certainty for economic returns.
There's a role to be played for our governments, federal and provincial, to help mitigate some of that risk that their stakeholders, their shareholders and we, as society, are asking them to take because as you said, it's the right thing to do. I think we're at that inflection point with some of our larger capital projects right there
BE: Are you seeing a noticeable transition in industry to accepting and implementing the ESG principles because there has been some considerable pushback when it comes to even some investors who, at first, demanded strict compliance with ESG principles
KB: There was, of course, some concern about the effects of strictly applying ESG simply because of the economics, but these companies practice ESG principles at a corporate level The issue for them is that to have broad, sweeping emissions reduction it requires large capital investment. We need to get to a point in our system where we're balancing the risk and the reward when we're asking companies to take that big leap But there's also a timeline component Things can't happen overnight These enormous, complicated projects take a long time to get approval, to confirm certainty around the economics, and then to get partnerships in place because more and more strategic partnerships are being formed than ever before
Securing the necessary governance around that required capital, building the projects and bringing them online will take years and years. And they’ll be with us for years and years Despite this formidable process, there are many companies and individuals that are taking it seriously, engaging in the right behaviors, and driving the right way. But this isn't done overnight, as most people would like to see. Those companies and individuals aren’t just talking about it, they're doing it.
BE: It's a complex dance, for sure. Karleen, thank-you for dropping by and providing perspective to this very contentious issue.
Rob Driscoll Business Edge Media
Q&A with Gerald Panneton, CEO of Gold Terra
Today I am joined by Gerald Panneton, a long-time mineral and resources executive. I saw you were listed as retired CEO, but that’s obviously changed.
What brought you back into the corner office?
GP: Well, it’s not the first time I’ve retired and come back. I guess it must be the love of the business itself, being in the resource sector, creating value with the drill bit. Being able to pick up undervalued properties. I’ve done it a few times and keep coming back because I love doing it.
RD: You have an incredible success story with Detour, raising $2.6 billion in capital and selling the company for $4.9 billion in 2018. What were the secrets to your success there? Can you tell us about your personal journey with the company?
GP: Actually, I wasn’t there when the company was sold. The value creation was done by the time we put the mine into production in 2013. The biggest achievement was recognizing the potential, and outlining 30 Moz of gold of which 16 Moz went into the Feasibility Study, raising $2.6 billion and building the largest gold mine in Canada in less than six years, from IPO to gold pour.
I think it’s important to have a vision where most people don’t. When Detour Lake was shut down in 1998 at a gold price of appx $250, I saw its potential. I made a deal with Pelangio Mines I in 2006, and the IPO closed the transaction in January 2007 where we acquired 100% of Detour Lake. My vision was a low-grade open pit, and we were able to deliver. We found a lot of answers to support building the mine.
RD: Going back to raising money, is that something you enjoy or is it just a requirement of the job?
GP: When you have a project, you have an idea and you know you can create value. It's very addictive. If you believe in your story, and your vision, if you believe in what you're going to be discovering, you just need the money to demonstrate that. For me, raising money was natural - the project was there, the valuation was there, and the market was there too. The market was definitely there at that time, and now to get to production in six years is pretty much unheard of.
RD: Can you just explain how it happened within six years?
GP: Well, first of all, the six years include two years of construction, 26 months. So you could say that we raised a lot of the money in four or five years, and we had the feasibility study completed in 2010 to sustain demonstrating the valuation - and, raising the money to build a mine, which costs (1.5 Billion CDN$) one and a half billion to build back in 2011, 2012. I think one of the biggest aspects that I was able to negotiate after purchasing the exploration right from Pelangio Mines I was negotiating with Goldcorp to acquire the mining lease and the surface right of the Detour mine.
The project was a brownfield project – that’s where you can save on the length of time between developing a greenfield project, a brand-new project, in the middle of a new place, where you have to redo all the permitting. So, buying the Detour Lake mine, a brownfield project, allowed us to not skip environmental impact assessment, but facilitate. The fact that we already had the surface rights - it was already disturbed, and we just had to justify it the new Mine Plan and environmental impact of the open pit scenario.
RD: For the lay people reading today, including me, can you just give me a quick description of the difference between a brownfield play and a greenfield?
GP: In mining, we differentiate a brownfield project from a greenfield project from a project that used to already exist, was shut down, was already disturbed as there was a mine there before. So already disturbance and an impact has happened before. We call them Brownfield because they're, not in a pristine environment, like in the middle of nowhere. For example, if you make a discovery in British Columbia, in a beautiful environment, it's not brownfield, it's greenfield. So the difference between a brownfield and a greenfield is an area that has already been disturbed that should be considered an industrial site because there was a mine there before.
RD: You were with Barrick Gold for a dozen years or so, can you tell me the difference between working with a mining mammoth like Barrick and a junior, such as Gold Terra, where you are now?
GP: Two different worlds! When you work in a company like Barrick, I had the same leader for 12 years - Alex Davidson. We were producing 8 million ounces of gold a year and we wanted to grow more. So, working for a company like Barrick, with plenty of money supply to buy property or drill property, it was not difficult to raise money. After the acquisition of Pangea Goldfields (2000), we added ounces and built two mines back then, Tulawaka and Buzwagki in Tanzania.
So that's maybe the biggest difference between a Detour Lake, Newcastle Gold, or another company like Gold Terra, which in a difficult market it's very difficult to raise money. If you're at Barrick or you're with Newmont, with any company that has cash flow, it's much easier because you do have revenues. A junior company’s value is almost at nothing, but has a tremendous potential if you make a discovery.
RD: And so that brings us to Gold Terra, operating in the Yellowknife region. Can you tell me a little bit about the prospects and why you joined this group?
GP: Five years ago in spring 2019, I was invited to look at the Yellowknife camp and the work done by Joe Campbell, David Suda and others under the name of TerraX Minerals, which was the owner.
We changed the name to Gold Terra because I wanted to have a more focus story. We're there to find gold. It's a gold camp. We're in Yellowknife. So, my first interaction was the due diligence and presentation in their office in Ottawa, they showed me what Yellowknife was all about and why they were there the first time when they came in in 2013. It's a camp that had been completely forgotten. The Con mine was shut down in 2003 when Gold was 340$ US per ounce. You've got a city of 20,000 people. You’ve got an Archean greenstone belt similar to Timmins, Val d'Or, Kirkland Lake, Red Lake, Hemlo. Very, very similar to other Greenstone Belts in Canada where most of the gold deposits have been found.
I'm not sure exactly, but I think if I was looking at gold production from Archean Greenstone Belts in Canada, you would probably reach 200 million ounces of gold produced over the years. So this is a good place to find gold. And like one of our CEOs at Barrick used to say: “it's much easier to find gold where there's a gold mine”.
RD: How would you say the technology has grown in the in the time that you've been operating in the industry? And is that a big advantage going into a brownfield project?
GP: Think about technology in the 1930s, or in the 20th century, early 20th century, when those camps were put together it was too expensive to drill. It was cheaper to sink vertical shaft into an zone or a quartz vein where you found the gold at surface, than to drill it in today's world. Drilling has progressed tremendously over the last 50, 60 years. The use of geochemistry, geophysic, the use of pathfinders, and the use of all the technology we can use has advanced.
The periodic table is your tool for understanding the chemistry of gold deposit. And with those different elements, it's either easy to recover gold or difficult, right? So, yes, technology is always at the front end of making mining easier, whatever is the method of processing or in the method of mining.
The Yellowknife Project
Deposit location map.
Source: Gold Terra Corp
RD: I can hear the passion about geology in your voice. Is it fair to say you've always had rocks on the brain, and not for brains -- but on the brain?
GP: You have to look at rocks like an open book. The rock is telling you a story, right? So when we look at rock, it's because we try to learn and understand what the rock is telling us. Whether it's a sedimentary rock or a volcanic rock, and when you look at a camp like Yellowknife, you want to find and you want to understand. For me, it was like being able to read the whole story of Yellowknife. When you have a gold deposit, it's there for a reason. So, where's the next one? And sometimes it's just extending at depth. Sometime it's a corridor, like the Campbell Shear which straddles the camp for more than 70 km long.
When you look at a gold camp, like Yellowknife or Timmins, or Val d'Or, or Kirkland Lake, or Red Lake, there's a story there. And there is a footprint for the gold deposit.
Now, is that footprint completely exhausted, or you can repeat it? And that's when the science of geology, the vision of threedimensional deposits, and the understanding of structural geology allows you to put the puzzle back and say: I need to drill there. You look at the potential of those zones and you can see it - it's open. It just needs to be drilled. The potential can be two, three, five, 10 million ounces.
Picture 1
RD: The stock is trading very low. Looking at you, as the CEO, and the story that I'm hearing, I wonder: what does it take to have the investors understand what the opportunity is here?
GP: The drilling program is part of it, but the question is if the market just very skeptical right now? And if so, how do you overcome that? And how can we reverse this? I think a very big hole in our deep drilling program that we aim to start in January after just completing the financing that we did this fall could change everything. Sometimes only one hole is enough to recreate that momentum.
RD: What’s the timeline for that first drilling?
GP: We’re aiming to start drilling again in January. We completed our master hole. Looking at our target number one, which is the Con Mine, we're in the process of delineating enough ounces to sustain and support purchasing the mine from Newmont.
Newmont’s goal is to sell the mine to us; our goal is to find enough ounces to support buying the mine. We're not going to buy a mine if there's not enough ounces, right? Because the mine comes with a lot of infrastructure, but also with some liability. And the offset and the reasoning to purchase the mine is: how many ounces do you need to find?
We came up with 1.5 million ounces. My target is to find 1.5 to 2 million ounces at 8 to 12 grams of gold, and have enough gold to sustain redeveloping a mine. If we don't find enough gold on this property, we're just going to walk away. We have a huge prospect. We control a thousand kilometers of the Campbell Shear.
The Yellowknife Project - Campbell Shear
Source: Gold Terra Corp
We have a lot of ground to cover, but currently we're focusing on the Con Mine program. So far we've delineated about one third (540,000 ounces) of that 1.5million ounces near surface. We have more work to do in that segment that could bring the resource to maybe 750,000 to 800,000 ounces at eight to 10 grams.
What we want to do is demonstrate that there's another million ounces. And if those million ounces come up, we would be able to have enough ounces to support purchasing the mine. But the moment you purchase in the mine, you have a mining lease, which include $150 to $200 million USD of infrastructure.
RD: Now about Yellowknife, can you help me picture what it's like? Is it a pretty rugged terrain where you're operating?
GP: In “Picture 1” (Page 12), you can see the mine that was shut down. You can see the infrastructure that are still left there. You can see the footprint of the of the old mine. We have road access ditches, powerline, warehouses, water treatment plant, settling pond.
We have a place where we're going to put the tailings again. We have all the road, the ditches, everything is built. We don't have any work to do there, it's amazing that the saving is probably six months and over a hundred million dollars of work. You can also see the town in the background where 20,000 people live. They have a good, well-paying jobs. You know, Yellowknife is a mining town. After the gold mines were shut down, they developed a lot of diamond mines in the Northwest Territories. And the base for those diamond mines was Yellowknife. So, there's a lot of mining expertise in the town of Yellowknife, ready to start a new one.
RD: Switching gears a little bit, what would you say is the greatest lesson you've learned in your career? And what is your biggest regret in your career?
GP: My greatest lesson has been to never give up. And for the second question - I don't think I have any regrets. There are things that I would do maybe differently. I've learned a few lessons the hard way. The end of Detour Gold in 2013 was very bitter for me. It was a very sad moment after building the company from scratch from a one-person company to having more than 800 people creating value. There's always regrets. But you have to learn from them and not repeat your mistake of the past.
RD: I read that you've learned to be a little more careful with trusting people. Is that fair to say?
GP: I think trust is something that you can earn. Trust is an important thing. If you look at the mining engineers on my team, there are two I've known for more than 30 years. That's important, for sure.
RD: And in terms of retirement, is there a target for that? Have you set an age that you will retire, or is it an open book?
GP: For me, I always have to keep that option open. I've retired before, after Detour, and it took me three years to come back. I think it's important to keep your options open. I love helping. This is for me, moment where I can do so much. I can still give a lot to this industry.
If we had more money supply, I would definitely love to mentor somebody to become a good CEO. I think it's a fascinating job. Canada is a resource country with plenty. And this is the value we have. I hope that we're going to be able to grow and get better at mining resources in the future and protecting the environment. We can do both of those things as far as I am concerned. Obviously, there's been a lot of criticism from the government in Canada in terms of being part partner with industry.
RD: Do you relish the opportunity to create value for shareholders, or how do you deal with that pressure?
GP: That doesn't bother me because when you do resource exploration the end-goal is about creating value from A to Z - it's a process. And through that process of discovery and going all the way to production, there's exit points for the investors. Depending on the risk, some of the people love to come in early, make five baggers or 10 baggers and get out before it gets built. And then a new set of investors comes because they love the feasibility study and the conservatives that you put in the project when it goes into production.
So for me, I own 3 percent of the company as of today. My average cost is 20 cents plus. I've put more than 2.3 million in the company. And, as you know, the stock is 6 cents. I'm losing a lot of money, but I believe in the story. I believe we can get through and that the project is amazing.
RD: When you're not working, what are you doing? What are your hobbies?
GP: I have many hobbies, so the list is long. I love the calm of being at the cottage. I enjoy walking on trails. Exploring new trails or walking the same trails every day. I'm a tree hugger. I love trees. For me, nature is where I rest the best. I’m also an avid skier and car racer.
RD: So you definitely have an edge! So you like speed, but sometimes it takes a few years to build a great company, right?
GP: Don’t give up – if you believe in something, you have to keep coming.
Award-winning broker Uthe is your trusted expert in mortgage matters and more
Keith Uthe is not your average mortgage broker.
Besides being an award-winning Independent Mortgage Broker with Enrich Mortgage Group, Keith is a Licensed Realtor, Certified Real Estate Investment Advisor, Smith Manoeuvre Certified Professional, and Real Estate Investor.
While mortgage holders often work with brokers who simply take the commission from the deal and disappear, Uthe looks at his role as an industry-leading coach who can provide valuable guidance to clients on an ongoing basis.
"Maybe you can foresee a move in the future –perhaps for a new job or lifestyle change – three, five, or 10 years from now When it comes to these large investments, it makes sense to have a prudent plan with contingencies in mind –and it is critical that you have access to the most important information.
"That is what I am here for; I am constantly educating myself so that I can be a valuable resource to my clients "
Recently, the Bank of Canada released a document indicating that about 50% of variable-rate, fixedpayment mortgages have reached their trigger rate, the point at which the mortgage payment only covers interest and contributes nothing toward the principal This affects about 13% of Canadian mortgages.
But that is not cause for panic, according to Uthe
"Mortgagesareusuallythemost significantfinancialtransactionsinour lives,soitisparamountthatwe understandwhatwearegettinginto,as wellashowthingsmaychangedownthe road,"Utheexplains."WhenImeetwith myclients–beitinpersonorvirtual–we discussnotonlywherewearenowand howwegotthere,butwhatthefuture maybring.Thereareallsortsof variablesthatshouldbeconsidered whenmanagingmortgagesandother realestateinvestments.
A series of interest rate hikes is the latest sign of how the mortgage industry can undergo great change.
"The last thing you want to do is make a rash decision that could put you in a difficult position," Uthe explains "If you work with me, I can go over various options, including possibly increasing your mortgage payment by a sensible amount so that you keep pace with the mortgage term without putting too much pressure on your current situation."
As a Smith Manoeuvre Certified Professional, Uthe can even show you how to make your mortgage payments tax deductible.
The Bank of Canada trims another 50 basis points
by Walter Bolduc Conference board of Canada
The Bank of Canada (BoC) cut its target for the overnight rate to 3.25 per cent, the Bank rate to 3.75 per cent, and the deposit rate to 3.25 per cent. In their announcement, the Bank of Canada indicated that the pace of cuts is likely to slow, with lower interest rates likely to take some time to fully materialize in the economy.
The Canadian economy grew by 1 0 per cent in the third quarter, with business investment, inventories, and exports weighing on growth. Fourth-quarter growth looks to be weaker than the bank’s October Monetary Policy Report projection.
New government policies, such as the temporary suspension of the GST on some goods, and reductions to targeted immigration levels will affect the outlook for nearterm growth and inflation in Canada The Bank will focus on underlying trends to guide its policy decisions
The possibility of U.S. tariffs from the incoming administration has increased uncertainty and blurred the Bank’s economic outlook. The threat of tariffs has likely contributed to a weakening Canadian dollar, which could put upward pressure on inflation
The economy is in excess supply, and recent indicators have tilted toward softer growth than projected by the BoC in October. CPI inflation has resided around 2.0% since the summer, and is expected to average close to the bank’s 2 0% target over the coming years
Upward pressure on inflation from shelter and downward pressure on goods prices have moderated as expected.
The global economy is generally growing in line with the bank’s expectations. The U.S. economy continues to show strength, but price pressures are persisting Indicators point to weaker growth in the euro area. China’s policy actions and stronger exports are helping growth, but consumer spending remains an issue
Key insights
Another cut is welcome news. The December 11 announcement provides relief for households as lower interest rates will ease borrowing costs. With plenty of mortgage renewals incoming in 2025 and 2026, household finances should remain stable given the recent rate cuts, allowing consumer spending to pick up heading into next year.
Unemployment ticked up to 6.8 per cent in November. Excluding 2020 and 2021, the increase brings the unemployment rate to its highest level since January 2017 Lower interest rates and weaker population growth will contribute to a declining unemployment rate going forward.
Businesses are less worried about interest rates. In our latest survey on business confidence, 35.1% of business leaders cited higher interest rates as a factor affecting their planned expenditures. This marks the first time since early 2022 that under 40% of respondents cited interest rates as a concern when making capital investments The focus among business leaders has now shifted toward government policies with close to half of the survey respondents identifying this as their top concern
Tariffs could impact Canada’s economic outlook.
President-elect Trump has touted plans to put tariffs on Canadian imports as high as 25 per cent across all products. Although this number is unlikely, any additional tariffs would present challenges to Canada’s economy The automotive sector, for example, employes over one hundred thousand Canadians and is highly integrated with the U.S. market. Any tariffs, especially if Canada retaliates, would also be inflationary and could alter the Bank of Canada’s current interest rate trajectory.
How do U.S. election results affect investment strategy?
By constantine Lycos
What does the decisive Republican win in November's U S election mean for your
investment portfolio?
The appointment of Elon Musk as an adviser in charge of increasing government efficiency should result in lower deficit spending or perhaps even a surplus.
If that happens, it may be detrimental for the economy and the markets, short term. Long term, it should be very beneficial for both the economy and the markets.
If the stock market declines due to reduced government spending, it should be viewed as a buying opportunity. Additionally, the US dollar should get stronger against most other currencies.
While not exactly market friendly, protectionist America-first policies should benefit US manufacturers
The nomination of Robert F Kennedy Jr as HHS Secretary also stands out. He has called big pharma “serial felons” in the past, citing billions of dollars of settlements the industry has endured in the last 20 years to compensate victims of products such as Merck’s Viox.
What to do? I would buy USDU, the US dollar ETF, sell big pharma stocks, underweight energy (increased drilling may bring more supply to the market), buy US domestic manufacturing stocks such as OTTR as well as some undervalued US banks that can benefit from a potential favourable regulatory environment under a Republican government – e.g., PFBC.
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The winds of change blow over the construction industry
3D Models, laser scanners, 360-degree cameras, drones, GPS and AI elbow out blueprints, clipboards and spreadsheets
by ernest granson
wWe all know what a construction site looks like: a huge hole in the ground with a lot of construction workers clambering over concrete pads, setting
That’s not to say the very physical component of construction has disappeared. The building still has to be put together by those concrete and steel workers as well as all the other trades workers. But even those trades – drywallers, plumbers, electricians and sheet metal workers – are wired into networks that significantly increase the cost efficiency, decrease the build time and create a comprehensive and immediate accessible records system And while those benefits are certainly welcome from a business aspect, there’s another key element to consider and that is the potential for better building techniques to help reduce the housing shortage.
Just what are those better building techniques? And what makes them superior to traditional methods? Well, that technology is called Building Information Modelling or BIM. In very basic terms, it amounts to data collection and, most importantly, centralization of that data Thus, you have the technology which collects the data and the software which merges the data for access by everyone involved in the project. This combination enables multiple functions that all groups can utilize in real time. What BIM really stands for is a model of a building with information embedded into it
For Bird Construction Inc , one of the largest and oldest construction companies in Canada, Digital Construction
story Continued on next page up scaffolding, wiring together rebar, framing walls, installing drywall and more But the days of the project manager and the architect examining a blueprint on the hood of a pickup truck at a construction site are gradually fading, being replaced by field accessible Internet, laptops and tablets and advanced integrated software.
helps to shorten construction time on projects, reduces wastage, and increases the efficiency of its staff members and crews Significantly says Kashish Madaan, Bird’s Lead of Digital Construction for Southern Alberta and Interior BC, BIM helps to pinpoint issues before they become problems on site during construction and that, in turn, reduces overall construction costs. But just how much cost and how much time can BIM save for a particular project?
“That’s a challenging question to answer,” Madaan explains “The savings vary with project complexity more complex projects tend to benefit more from BIM. Other factors include the quality of the design model, enhanced collaboration and communication for faster problem-solving, and quick decision-making facilitated by the information available through BIM.“
To put that into perspective, let’s take a look at how BIM differs from traditional design modelling. That means we go way back to 1842 when chemist, astronomer and photographer John Herschel discovered that handmade drawings could be reproduced by laying a translucent or semi-transparent drawing on a chemically coated paper, then exposing it to ultraviolet light. The exposed parts of the drawing turned blue while the lines, which blocked out the light, remained white. This process could then be used to inexpensively reproduce as many drawings as necessary. In the 1940s, diazo blueline prints, which involved fewer toxic chemicals, began to take the place of blueprints. As you might guess, the blue-line process resulted in blue lines on a white background. In the late 1990s, both of those
reproduction methods were replaced by large-scale scanners and printers and then by AutoCAD or ComputerAided Design systems.
But, as Madaan points out, even those CAD-produced drawings were limited to a 2-dimensional flat surface
“When those plans were drawn, they were simply lines,” he says. “But now, with BIM, what it means is that each line you see on a blueprint represents something When you open a Revit model file on your computer and select a line within the drawing, it displays the properties assigned to that line or group of lines. These properties indicate whether it represents a wall, plumbing pipe, or another type of element This feature provides all relevant information upfront, including attributes such as wall length, width, and area, which are automatically populated through the Revit design software.
Kashish Madaan, Lead - Digital Construction (Southern Alberta and Interior BC) at Bird Construction (right) and Shahin Mohamed, Digital Construction Coordinator (left), examine a DJI Mavic 3E drone which has just set down after its autonomous flight path over the construction site at SAIT's Taylor Family Campus Centre Redevelopment Project. After capturing images of the construction site the images will be uploaded to the DroneDeploy software for processing into a 3D map of the site.
Photo credit: Ernest Granson
“For another example,” says Madaan, “let’s say the architect wants to initiate an energy consumption analysis. That analysis can be based on the information which has been assigned to specific objects in the model. If the model shows that windows are facing southwest and the building
is receiving a lot of sunshine it means there will be less energy needed to heat up the building. Now we’re saving on energy consumption. If the windows are facing north or east or the east and just getting sunlight during the morning, more energy must be utilized to heat up that space in the evening So, during the design phase, all of this information can be used to make our project more sustainable and efficient.”
Functions such as energy analysis are enabled when the architect enters project coordinates into the software so that the building becomes located in real space and in real time. Usually, those coordinates are based on survey points or GPS location From there, the architect can begin to develop the design. Once the initial model is built with the relevant metadata added to the model elements, the design can be visualized in 3D, which leads to the next step - clash detection. Clash detection is essential to identify any conflicts, especially in huge projects with a massive design and the vast number of components such as plumbing pipes, supplier ducts, return air ducts, fire prediction pipes, electrical wiring and conduits, electrical cable trays and many more. The traditional process would be for each of the various contractors and consultants to provide their own set of drawings to the building contractor with the assumption that all of the elements would fit without conflict. Then the process would see each of the subcontractors install their components; the electric trades would install their wiring and cable trays; the plumbing would go in, and so on. Inevitably, some of those components would find themselves fighting for space since the plans for each subcontractor had been designed independently. To resolve this, some components would have to be removed and then reinstalled The result was a lot of rework, a lot of wastage and more time spent on construction
“In today’s world,” Madaan explains, “all of this information is readily available prior to actual construction through BIM. The subcontractors submit their sets of models to us as they are developing them and they are collaborated into one platform in which we run the clash tests If I know there is a certain space into which services are not fitting, we might have a conversation with the architect to maybe lower the ceiling a bit. The important thing is, we are having those conversations even before construction begins”
While BIM is primarily used to create the 3D models that encompass the geometry, spatial relationships, and data associated with building components, VDC or virtual design and construction software, is an integrated approach that combines BIM with project management techniques to optimize the construction process
story Continued on next page
It focuses on the planning, coordination, and execution of construction activities. VDC tools such as Revit, Navisworks, Autodesk Assemble, Fuzor, Synchro and many more allow the contractor to estimate cost and quantities, as well as construction scheduling. By marrying BIM and VDC, the contractor is able to visualize a schedule and determine issues before construction starts. Some VDC platforms also incorporate pricing for labor, equipment and even for cost of living, politics and geography.
As far as accuracy of those functions – information populated into the BIM model, scheduling and cost estimates – Madaan says it’s dependent upon the accuracy of information entered by the various teams involved in the project.
The on-site reality show
There’s another vital component which the construction industry has adopted to achieve even more cost efficiency and that is what Madaan calls reality capture By harnessing mobile technology, contractors are able to accurately monitor construction progress, not only to make sure the project is on schedule but also to track material usage and cost, again, all in realtime. This component is usually divided into zones; drones, laser scanners and 360-degree cameras
A drone’s primary mission is to create a 3D map of the construction site. It flies autonomously over the site, captures the data and flies back to the on-site operator. For the most part, the data is in the form of images, but the payloads on the drone can vary. For instance, it could be outfitted with a laser scanner camera for various measurement functions or with a thermal camera which can estimate heat loss.
Back at the office, Madaan says he uploads the set of images onto the DroneDeploy program “It takes about three to four hours to process the data. Once it’s processed it creates the 3D topography,” Madaan says. “A typical schedule would see the drone complete one flight on a Monday and then again later in the week. I can then compare the data for the two flights and it tells me how much earth has been moved. If the excavator contractor is billing me weekly, I can confirm the volume of earth moved and approve the bill A bird’s eye view of the site, helps us plan our logistics as well.”
The drone can determine elevation points to assess not only the site’s topography but also boundaries and flood risk, information that is essential for issues like insurance premiums and legal disputes.
Laser scanning or HDS (high-definition surveying) has become another important tool to increase construction efficiency and safety
Although the technology has been around since the 1960s, it wasn’t until recently, when bandwidth and data storage costs became economically feasible, that the construction sector has been able to utilize it consistently.
In very basic terms, a laser scanner captures the shape and geometry of objects and creates 3D models which can then be integrated with BIM and/or VDC to produce accurate visualization of a building project including the architectural frameworks and the various utility or mechanical components such as ductwork Measurements of structures by a scanner can be as precise as a millimeter and can capture millions of data points per second so a technician using a single handheld scanner can complete the measurement of project in a fraction of the time that it would take a team of workers over a period of days And, because the scanner is able to measure high ceilings from the ground or penetrate into inaccessible areas it can eliminate safety hazards.
Once the data, called the “point cloud” is gathered, it’s uploaded to create a database of connecting points in a 3D co-ordinate system The resulting 3D models are then accessible to any personnel or teams of personnel anywhere in the world, reducing or even eliminating the necessity for site visits
The drone can determine elevation points to assess not only the site’s topography but also boundaries and flood risk, information that is essential for issues like insurance premiums and legal disputes.
Working in conjunction with laser scanning is the use of 360degree cameras mounted on hard hats that document progress on the job site. As Madaan explains, there is no extra work or stoppage involved for a project coordinator or site foreman who simply walks through the site as they would on a normal inspection. Recording of the 360-degree camera coverage is uploaded to the server and is available for viewing by everyone associated with the project. Progress can be monitored by viewing the day’s inspection and comparing it to previous inspections. A time lapse sequence can also be created throughout all the phases of the project Software such as OpenSpace Capture, which is one of the programs used by Bird Construction, tracks the location of the camera wearer on the site in relevance to the floor plans. This allows the viewer to know exactly where on the site the images/video are being captured. The viewer sees a view similar to Google Maps
While this captured data is useful to follow construction progress, there’s another significant purpose and that is for providing evidence in case of a claim by one of the parties involved in the project. “Take for instance, a claim that this particular wall wasn’t installed correctly or something had been installed or left inside of a wall that shouldn’t have been,” Madaan says. “With time stamped images/video recordings, any of those claims can be confirmed ”
From blueprints to digital analysis
There are even more sophisticated software tools available that can boost efficiency for construction products as Madaan points out, software that Bird, in fact, is already using such as Revizto. This tool greatly adds a new dimension to project co-ordination and documentation The Revizto app incorporates massive amounts of information about a project including all 2D drawings, 3D models and issue tracking that enables efficient communication between all project stakeholders. Bird Construction plans its construction logistics in a 3D environment Site superintendents utilize VDC tools to visualize various scenarios, allowing them to address complex logistics issues before they become actual problems.
“To enhance progress tracking,” says Madaan, “our team conditions models to feed data directly into Microsoft Power BI This enables the creation of customized progress tracking reports.
Traditionally, we would compile information manually in Excel or on paper. Now, this information is added directly as model attributes, streamlining the process and ensuring real-time updates in Power BI.”
For example, during a concrete pour, the foreman can enter the quantity of concrete in real-time using a tablet, along with relevant details such as the concrete grade and cost This data is live-linked with a Power BI report, ensuring that everyone, including management, is instantly informed when the job is completed and aware of the associated numbers. There’s no need for manual calculations, which saves time and eliminates unnecessary update meetings Equally important, this type of software serves as a data management and analytics tool, enhancing overall project efficiency
It should also be pointed out that Artificial Intelligence has become a vital component of construction software. There are numerous apps such as Autodesk Construction Cloud, Procore, nPlan, Doxel and more which integrate AI for not just project management and analysis but for also for prediction of risk, potential delay and budget overruns Just as in other industries, AI is considered a tool that will bring analysis, prediction and efficiency to a new level.
Aerial view of the construction site for SAIT's multi-year Taylor Family Campus Centre Redevelopment Project. Bird Construction Inc. serves as general contractor for the project. Photo credit: Bird Construction
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The new shift in construction technology
is already here – like it or not
Fto a digital business model is particularly satisfying. He says his interest in digital construction started in India and he was able to break into that area after completing a BIM Management course at George Brown College in Toronto and working with a BIM consulting firm before being hired by Bird.
by ernest granson
or Kashish Madaan, who graduated in civil engineering in his home country of India in 2014, helping Bird Construction transition projects as the new Calgary International Airport runway and the Calgary Stoney Trail Ring Road, Gray was able to confirm the advantages of an integrated digital environment. But that involvement also revealed to Gray that it’s the smaller, mid-sized companies that really need help.
“I’m really passionate about this technology,” he says, “and Bird is helping me to develop important skills in that area and to grow even more into that role.”
Madaan does point out, that even though Bird sees digitization as the future in construction, not all contractors have the capability of providing that model yet “There is slow improvement and more companies are hiring skilled people who can develop those models for them. But it won’t happen overnight and it will be a gradual change.”
That’s the way Shawn Gray, founder and CEO of ConstructionIQ Advisory sees it. With nearly two decades of experience, the majority with global giant Jacobs Engineering Group Inc and Lafarge Canada Inc., Gray says he spent a lot of time experimenting in the digital and AI space with those companies to discover the necessary ingredients to accelerate adoption of these new tools. With intimate involvement in such major
“I realized that large, mega companies needed guidance to switch to digital solutions,” Gray says, “but the most valuable solutions we brought in were those that actually helped the customers perform better, which allowed our internal business to perform better. With that realization, I decided to go on my own with the mission to identify the meaningful solutions for those smaller companies. ConstructionIQ Advisory develops initiatives and different partnerships so those firms can explore emerging technology with significantly less risk, time and cost The lack of results experienced from previous technology investments is really the number one hesitation around new technology investment and adoption today, whether it's a large company or small company. It’s vital to demonstrate the proof of value of different solutions through user-execution rather than hypotheticals. What I do is bridge the gap between the construction industry and local emerging innovators Here in Alberta, there's been more investment made in construction technology than Vancouver, Toronto, Montreal. There are over sixty built-tech companies located in the prairie region, so we are able to knock on doors of these innovators and collaborate with them.”
story Continued on page 25
Technology or more toilet paper?
When it comes to making a financial and staff commitment for digital tools and staff training, there is still much hesitancy in the construction sector. As Gray states, the psychology of money is interesting. “The financial bar for digital technologies has been significantly lowered over the past decade,” he says, “so, it should be a no-brainer for a mid-sized company to realize that it’s not necessary to spend $40,000 on the technology when the cost is closer to $5,000 and it automates 40% of the work. This costs less than what a company may spend on toilet paper annually so why would we not do this?
But it’s the psychology – the fear of results - which is the biggest barrier When do I get that ROI? That question can be resolved for businesses with a proven methodology based upon establishing a proof of value.”
Gray says, in his experience, the two fundamental factors that inhibit ROI for mid-size companies are the time required to research and implement digital technologies, and on-going support for the company, because most small and mid-sized companies simply do not have that. Twenty years ago, that support did not exist and companies were left to fend for themselves to learn about those technologies. But in today’s world, there are consultants who specialize in support.
“One of the cliché phrases during the last 10 years or so,” says Gray, “is that new technology is disruptive. Generally, that phrase is meant to be a positive term, but in reality, it really is disruptive to business.
When you’re out there in the field trying to complete a project, implementing something different can be a major distraction. The traditional approach to bring in new technology or systems has been to say, ‘Let’s pilot something for eight months, maybe a year, and see if it sticks.’
That can be a year of headaches for the field operators Our methodology is to lead the client through a short proof of value project and define the company’s objective. Once that objective has been determined, we’re not going to spend a year playing with this system. We’ll take the client through a four-week cycle – a sprint – with a very specific objective, provide support every day, get client feedback and then evaluate. From there, the client can extrapolate to establish if the ROI has been met Companies have been highly receptive of this type of concept. This would not have had the same reception 10 years ago. But because of the support, and also because of the many local companies who now offer technology at feasible costs, there is high positivity.”
Shawn Gray Founder and CEO of ConstructionIQ advisory photo credit: ConstructionIQ Advisory
The church of Artificial Intelligence: non-believers may be left behind
IAna Domingues is EY’s AI Lead for Global Energy and Resources and works with clients around the world to develop their AI strategies. At the recent Energy Disrupters Conference held in Calgary, Ana discussed this pressing issue as a keynote presenter with fellow panel participants but also took few minutes to talk about AI with Business Edge’s Ernest Granson
Ana Domingues, EY’s Artificial Intelligence lead for Global Energy & Resources in conversion with Business Edge’s Ernest Granson
t seems that most conversations involving technological innovation are now dominated by these two words: artificial intelligence story Continued on next page Advocates maintain that AI’s ability to sort through petabytes, exabytes, zettabytes, etc (well, you get the message) of data in a nano-fraction of the time it would take a human opens the door to huge amounts of potential solutions or strategies for businesses. For fossil fuel companies that are steering their way through the transitional energy forest, AI promises to provide some predictability, and maybe even control, to come out the other side of the forest in a healthy state
BE: Ana, really appreciate you sitting down with me today. You are very passionate about the potential for AI to not just contribute to better energy management, but to actually lead the way for a successful transition, and you've been delivering that message around the world as recently as this past summer at the World Energy Congress. But what is it about this technology that has you feeling so strongly about it?
AD: Well, it's about the technology’s unique ability to analyze through complexity, the ability to understand patterns and trends and go through millions of potential possibilities for a solution, then identify the one that fits best a specific problem, doing it in minutes and not in hours, weeks or years, and doing it with the accuracy that is required to provide confidence and minimize the risk of the decisions we are making.
BE: It's my understanding that all the biggest oil companies are already using AI in some form or another: ExxonMobil Shell, BP, Chevron, Total Energies, etc What are the practical ways in which they're utilizing the technology, and how is that contributing to the actual transition?
AD: All those big companies you've mentioned, and many others, are big champions of AI They have been exploring AI for many years already. Aramco, for example, announced about six months ago in a press release, that their AI solutions have delivered them $500 million in savings AI was used to increase productivity, reduce maintenance costs through predictive maintenance, and also to increase safety As well, the implementation of AI on the upstream component helps to increase energy efficient exploration which contributes to a decarbonizing effect
In some cases, 50% of refinery OPEX are from the energy consumption. Imagine if not only savings can be gained from being more efficient, but also what you can do for the environment by consuming fewer commodities such as electricity and water. AI can be used to automate the activation of measures that create those savings These are just some examples.
There are also other ways that AI can benefit decarbonization, specifically, support for carbon capture There are multiple studies from the International Energy Agency that points to the fact that we will consume oil and gas for a long time. So, the route to energy transition is to decarbonize, to make greener those oil products for that you can use carbon capture Carbon capture is a very expensive technology and it is still embryonic. AI can help companies that are already developing this technology in multiple ways. It can also help to find and identify reliable repositories of captured carbon. For instance, AI can help with the analysis of potential cracks in the repositories in order to confirm the trust that you must have in such storage systems.
These are just some practical examples where AI can help with the current extraction of fossil fuels and in the transition of bringing in the renewables of sustainable energy. They are the two key aspects in which AI can contribute: to make the consumption of energy more efficient through the whole value chain of the oil and gas, such as preventing spillovers, reducing flare events and venting, all of which are contributors to emissions; and to help advance carbon capture to make it more profitable and less risky
But to speak to renewables as you mentioned, many of the oil and gas players have started building a renewables portfolio. AI has multiple uses in helping to make renewables businesses more profitable and more acceptable from a social and environment perspective.
BE: What about AI’s use for mid- and small-sized energy companies, whether they are in the sustainable energy sector or the legacy fossil fuel sector They may not have those financial resources to use this really advanced type of AI,
AD: That's a very good point. Here, at EY, we have many discussions about the practicability of AI Our recommendation is to look at what these giant oil and gas companies have been doing in that area and how it can be leveraged as a proven success The benefits are clearer and so there is less risk for the smaller companies to follow This is important because we need to show that AI and other technologies can actually deliver on the returns for the smaller companies Generative AI models have already been trained, leveraging the large language models, so it's a faster route to value and impact
BE: Well, let's talk about the elephant in the room, which is energy consumption and the many questions being asked about it. Will the advantages offset the disadvantage of that huge energy consumption?
AD: I am usually optimistic by nature So, when I think about the level of consumption, it’s positive that the companies pushing to use AI are giants in the industry They have huge investment and research capabilities and they also have very ambitious sustainability goals. In terms of energy consumption, it’s fortunate that AI is mostly in their hands, because they will have the capabilities to advance research sufficiently to start reducing the consumption of energy I would say that this large energy demand that is coming will be flattened and reduced as more efficient models are developed There are multiple research efforts already taking place.
Is the current energy consumption worth it? I have a strong belief that there is no energy transition without AI. The level of complexity towards which we are heading is extraordinary and the fact that we must make decisions in minutes, so much more quicker than we have been doing, convinces me that only AI can help us with it We humans, need to have our capabilities augmented to be able to go through the very complex energy system towards which we are heading
And it's not just operations It's also about making all the elements profitable fast enough so that we can deliver on the energy transition. The second thing is, and here I'm going to steal some insights from Microsoft Generative AI actually gives the dream of every single person on the planet to have a doctor and a teacher, because with Gen AI, you can start having access to medical help and education without having that person in front of you. That kind of help is only feasible, for 7 billion in the world if you use AI I think that's good dream, good enough to pursue and invest in making AI more efficient That’s not a concept I expected to be brought up, but is something important to be thinking about It’s a concept of optimism.
I have a strong belief that there is no
energy transition without AI The level of complexity towards
which we are heading is extraordinary and the fact that we must make decisions in minutes, so much more quicker than we have been doing, convinces me that only AI can help us with it.
BE: Currently, we're really only seeing what a fourth generation of AI can do. Considering how quickly these new generations are being developed, do you think, or should we be expecting an even greater leap in capabilities as these generations become available? If so, what possibly more can the technology offer?
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AD: Wow, that's a very difficult question. In terms of maturing and evolution of AI, it's going to be even more exponential Humans are like this, right? We like to invent things, and we are just scratching the tip of the iceberg on what AI can do Many people say that AI will eventually be able to completely replace humans. Maybe, I don't know Maybe it will take 100 years to get there
I believe that AI is an extraordinary tool to augment people's capabilities. You will always need humans in the loop, but AI will start doing more and more things that humans are doing now – things that are mundane, repetitive, boring, and make your brain stiff, right? Having said this, the transition, as in any transition, will require people to invest energy, time, bandwidth and the will to change. That is the complexity of the journey. It's in the people who will be changing this technology It’s a human-centric transition a human-centric journey, because people will need to change dramatically, the way they work, the way they do their activities in professional and personal lives and, unfortunately, like with many other technologies, those that don't progress along with it, will remain on the outside.
BE: That's a really powerful perspective, which I think, around which we all have to wrap our heads. That brings me up to this next question In your experience, have you run into what you would call cultural resistance to the use of the technology and the way it's applying to transition.
AD: Oh yes Every day It's part of human nature that we embrace curiosity, but we are made of habits, right? Changing habits is hard, and that's why, at EY, we talk so much about change management. It's not that people do not want to change. It’s that it requires a personal investment and also time required to think about how you're going to change, how you're going to do things differently There is always a temptation for the majority of the population to try to do the things they have always done. So that means multiple examples of resilience
It varies a lot with the companies I with whom I consult. An example is the CIO of a major electrical company, with who I discussed on where to start when investing in Gen AI He said, ‘Let's not start with the engineers. Engineers are going to doubt everything we give them ’ That was an interesting claim, and it is true. If you give a predictive maintenance model to an engineer and there is no trust, the engineer will continue to do the things exactly the same way it has been done the last 20 years. Forget the investments you've done on the model. You know, there is no value realized until it gets adopted in another company or a completely different department. Here it was the CIO, who was saying there will be a big challenge in introducing generative AI because not even the CIO believes in it.
My comment was that, in just a couple of years, the CIO will see himself only with colleagues that are older than 40 years of age because no one younger will want to develop software and be part of an IT group if generative AI has never been accepted in that department Every company needs to find the right balance of change. If you don’t have deep pockets, you don’t want to move too fast because you can really fail quickly But you also don’t want to go too slowly because you may miss the train. That will be a disadvantage if you are trying to attract the talent such as engineers, field technicians and data scientists. Many industries are struggling to attract that talent.
BE: We're still dealing with the human nature aspect. I would imagine that's the hardest part, not necessarily developing the technology.
AD: Well, developing the technology, is not easy either, right? But there is no point in investing so much effort in the technology if the human part is not at the centre and at the beginning of thinking about what to do with AI.
Yes, there is an energy transition – and to manage it, we need to understand it
Ihave studied, written, and talked a lot about energy over the past few years – articles in BIG Media and elsewhere, countless presentations in classrooms, on webinars,
to conference delegates, plus podcasts and radio interviews.
Together with a great expert team and support from the University of Alberta and Canadian Society for Evolving Energy, I have created a MOOC (Massive Open Online Course) called “21st Century Energy Transition – How do we Make it Work?”. The MOOC has been viewed by more than 6,200 students eager for a comprehensive view of energy, and its first major update is about to be released.
The theme throughout has been energy transition – the fact that humanity runs today on a mix of energy sources that is different from the mix 50 years ago, and which will be very different again 50 years from now. That is a pretty straightforward concept, well supported by historical data and by reasoned analysis of potential future trends.
But the term “energy transition” has been co-opted by different groups to mean different things. In particular, those who believe that climate crisis is upon us (I will call them the CC group), and that fossil fuel emissions are largely to blame, promote the energy transition as a rapid change to alternative energy sources such as wind, solar, and geothermal, with some (but definitely not all) conceding nuclear a place in the mix.
Other more moderate voices understand energy transition as I have defined it, but talk about “energy evolution” or “energy transformation”, seeing “energy transition” as terminology tainted by CC views.
And then there is the other extreme – people who seem to believe fossil fuels have powered humanity forever and will continue to do so for the foreseeable future (I will call them the FF group). Most are OK with nuclear and hydro having a place in electricity generation, but they see wind and solar as inadequate and uneconomic, and having no proper place in humanity’s energy supply. In their minds, there is no energy transition.
Energy transition is real
Let’s get a few basic principles straight. Reference some of my past BIG Media articles for details.
Halfway between Kyoto and ‘Net Zero by 2050’, how are we doing?
Are we throwing away our energy security?
Is ‘Big Oil’ holding up the energy transition?
Use of scenarios in our energy future is a double-edged sword
Real-world lessons on energy transition
Brad Hayes
Until then, all people had to keep them warm and cook food were combustible fuels that they could gather from the environment – wood, grasses, and dung. Since then, energy transition has passed many milestones:
Coal reached 50% of energy supply by 1900, powering steam engine technology and serving growing heating and nascent electrical markets
Oil and natural gas arrived on the scene in the early 1900s, and grew explosively from the mid-20th century by providing modern transportation fuels, domestic and industrial heat, electricity generation, and petrochemicals
Hydroelectricity grew steadily since before 1950 as wealthy nations electrified
Nuclear fission grew rapidly in the 1970s and ’80s to serve exploding electricity demand, but has been flat in the 21st century
Modern renewables – wind, solar, geothermal, and biofuels –have actually been around for a long time, but became significant electricity contributors to the energy mix only since 2000
A quick sidebar here – Figure 1 (click here to see) maps primary energy production, which Wikipedia defines as “the energy found in nature that has not been subjected to any human-engineered conversion process.” So it includes energy wasted in the process of delivering the energy we use. For example, some of the energy in a barrel of oil is wasted in refining it to gasoline, and more is wasted as heat and friction when the gasoline is burned to drive a car. There is an argument, therefore, that primary energy growth will slow as we find more efficient ways of converting it to useful energy. That is probably true, but it does not change the big picture of energy demand growth.
Principle #1: Humanity is in the midst of an energy transition that began more than 200 years ago, when coal came on the scene in a big way (Figure 1).
Principle #2: Energy demand will continue to grow – because global population is still increasing, more and more energy-hungry technologies are appearing (hello, AI!), and global citizens lacking secure and affordable energy strive for more energy-rich lifestyles.
Principle #3: Energy security is humanity’s #1 priority – not climate, not emissions, not hunger, not poverty – because we can address those other important issues only from a position of energy security. If our daily lives are focused on subsistence, we have no ability to address anything else. Only energy security can lift people from subsistencelevel living.
Principle #4: Energy transition must continue – we cannot keep doing tomorrow what we are doing today
Energy production today has many negative environmental impacts that cannot be ignored as production grows
Humanity has always innovated, finding new ways to do things better
Existing resources – particularly fossil fuels – are not limitless As they grow scarcer, whether that is next year or 20 years from now, they will become more expensive, losing their competitive edge
Countries are motivated to develop more diverse energy supplies to reduce being held hostage by one or two energy suppliers
So who is correct about energy transition? Thinking about the four principles and examining humanity’s history of energy consumption, the answer is obvious – energy sources will continue to change over time (the “moderate” position). Extreme positions held by CC and FF groups are not tenable – fossil fuel production is not going to fall off a cliff, nor will it continue to grow forever
Why review these basics now?
While my work supports a moderate position and the physical realities of energy production, much of what I have written has focused on the fact that rapid and wholesale change of energy sources championed by the CC group simply cannot happen. It is important to keep making these points, because CC proponents have exerted such undue and dangerous influence on political policy
But the dangers of the extreme FF viewpoint were recently highlighted for me, following an invitation to attend the Energi Simulation School, where leading energy engineering researchers in Europe and North America and their graduate students exchanged ideas on humanity’s energy future It was a great “moderate” meeting, identifying real issues and working to find real-world solutions.
The Energy Dilemma Game challenged teams of students to balance energy, environmental, and social issues in recommending the best course of action to the government of a fictitious island state looking to develop its resources, support its people, and protect its environment. There was great thinking, discussion and learning –and a realization that there is no simple answer.
My colleagues and I posted about the school on LinkedIn, and I was shocked at the pushback from FF adherents. Among the comments posted:
“There is no transition. It’s more fossil fuels than ever.”
“So called renewables are an environmental disaster and monstrously expensive. And completely unnecessary. Solving a nonexistent problem.”
“There is currently no global energy transition. Nor will there be one in the near future.”
“The transition you speak of is a pipe dream. It can’t physically be done.”
Part of the issue is that some (both moderates and FF folks) have bought into the CC definition of “energy transition” as rapid wholesale change – as opposed to the realities of energy transition outlined here.
Semantics aside though, the FF position is as polarized as the CC position, and is equally wrong.
We are in the midst of an energy transition that has been unfolding for more than two centuries, and it continues unabated, whether you call it transition, transformation, or evolution. Wind and solar will not save the world. Fossil fuels will be less important in the future than they are today. All energy sources we know now will have a role to play, governed by local resource availability. Humanity will continue to innovate, developing new ideas to create energy and be more efficient using it.
The future will be determined by the moderates. Polarized CC and FF positions serve only to impede real progress – both because their goals are unrealistic and because they fail to recognize the wide spectrum of human opinions and aspirations. Neither is going to convince anybody outside their extreme camps. The faster both sides migrate their views toward a more moderate reality, the easier, quicker and less painful the energy transition will be.
Take the red pill before it’s too late!
Irob driscoll
n the action drama that is our modern life, far too many people have been consuming a steady diet of blue pills.
And I am not talking about the blue pills that inspire aging leading men to reach the climax before their character is removed from the script.
Rather, I am referring to the blue pills that allow people to continue living in (sometimes) blissful ignorance under the illusion of the Matrix.
Those unwilling to take the other pill should stop reading now, as I am about to provide a digital dose of Red-Pill Reality (RPR). For many, it will be a difficult pill to swallow, but it is essential that you consume this if you wish to join my fellow Neo-liberals and me in understanding the Matrix. Allow me to lead you through a mental meta Morpheus that will give you clarity, if not solace.
You may find the climate alarmism Trinity – rapidly rising seas, temperatures, and incidence of severe weather – hard to hack, but this thought-provoking trilogy will Switch your thinking as you de-Cypher critical codes:
Turning down the temperature on ‘climate catastrophe’ debate
Sea level is rising – should we be worried?
The real reason billion-dollar disasters like Hurricane Helene are growing more common
Alas, you need not be an Oracle to understand that we are not heading for a climate Apoc-alypse. You need only to choose the red pill to see how the Agent Smiths of the world (Portuguese comic rising even faster than global sea level, Democratic Party’s ‘Good vs Evil’ campaign dies in its bed of lies) will do anything to protect their control of the Matrix.
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Those who swallow the blue pill are led to believe there is but one antagonist (Barrage of attacks on Trump could backfire). Meanwhile, those who control the Matrix literally fill their pockets with cash (U.S. jury finds Senator Menendez guilty in bribery trial).
Those who subscribe to our RPR regimen will see that followers of the Blue Pill Team (BPT) are ultimately a threat to their own existence (Really nice people are a really big problem), and that those who convince themselves that they are on high moral ground are often making matters worse (My war against really nice people – Part 2).
Consuming RPR means you will need to dodge serious attacks on your character as you raise your voice amid the Revolutions (Staying on high road is well worth the struggle). RPR has helped us make great strides against the machine, but the battle to resist the BPT’s false reality has just begun (How AI is going to terminate us).
While gains against the simulated reality have been substantial, the Matrix is already being Reloaded, and we must brace for the Resurrections. It is not an easy path, but the truth serum that is our digital red pill at BIG-Media.ca enables you to smash through mental barriers like a Tank.
If the medical machine once again attempts to have us shelter in place and line up like robots to take their prescribed pills, we must continue to stick with RPR and recall lessons learned (You might not want to talk about COVID, but it needs to happen) so the dystopian society that BPT has manufactured does not become our reality.
If you intended to avoid Red-Pill Reality and inadvertently made it through all the rows in this column, I guess you blue it. You are now, at last, well-red.
Free your mind. I can only show you the door.
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